KIS Lettings has stopped asking new tenants for a deposit; instead, it asks them to provide a home-owning guarantor. Photograph: Alamy

We all do things out of habit, which doesn't make much sense if you stop to think about it. Married friends of mine have had a five-year argument over which one sleeps on the left side of the bed. Another friend tells me her husband drives her mad by never putting teabags in the bin when he's finished with them. He just can't help himself.

Something we do in the lettings industry without ever questioning why is asking tenants for deposits. Deposits are a relic from a bygone age. Landlord-tenant relationships are ideally long-term partnerships based on trust. Turning to someone you've just met and asking them for money because you don't believe they won't damage your property or break their contract is hardly the best start to a trusting partnership.

The system of credit checks offers no real assurance of future reliability of tenants, especially in today's climate where jobs can be lost and a tenant's ability to pay rent can change in an instant.

Is £500 or the first month's rent going to rectify much in case of serious damage or non-payment? Aren't you limiting your potential tenants to people who have several hundred pounds lying around? I heard someone on the radio recently who got a payday loan just to afford his deposit. It makes little sense to encourage tenants to take out high-interest loans just to be able to rent a property.

The recent Court of Appeal ruling in Ayannuga v Swindells, where a landlord was fined and prevented from evicting tenants allegedly behind with their rent as he hadn't given them the right information about their deposit, tells you all you need to know about the deposit system in 2012: it presents a minefield of hassle and hazard for private landlords, with no obvious benefit.

KIS Lettings, my company, has abandoned deposits. I'm a landlord myself and I wanted a foolproof way of finding – and keeping – good tenants. We ask new tenants to nominate a guarantor, a home-owning friend or family member, to sign a legally binding document, stating that, should the tenant fall into rent arrears or cause damage, they are jointly liable. In our experience, tenants are less likely to let down their mum than a faceless landlord.

We have even improved the system by eradicating the lengthy court processes we previously faced to enforce the guarantees, by using an exclusive insurance product offering a nil-excess rent guarantee and full legal protection cover. This means landlords get their money immediately and the insurance company has someone else to pursue besides the tenant, offering them a less risky proposition.

The solution offers peace of mind for all. In one year – and for almost 1,000 tenancies – we've had one dispute with a guarantor. Eventually, as he was a property investor himself and having experienced firsthand the benefits of the system, he decided to hand all his properties over to KIS Lettings.